Paynear to buy GoSwiff for $100 million

The acquisition will give the Indian payments firm Paynear a quick entry to South East Asian, Middle East, the Commonwealth of Independent States (CIS) and Eastern European markets.ET Bureau | October 10, 2017, 06:40 IST

Paynear specialises in payment gateway and is founded by a group of serial entrepreneurs who had sold E Billing Solutions as part of a $480 million deal four years ago.Paynear is buying Singapore-based GoSwiff for around $100 million (Rs 650 crore) in a deal that will provide the Indian financial technology company a quick access to 20 new markets.

Paynear specialises in payment gateway and is founded by a group of serial entrepreneurs who had sold E-Billing Solutions as part of a $480 million deal four years ago. GoSwiff is owned by Swiss billionaire and currency ink maker Maurice Amon, and is worth nearly eight times Paynear’s equity value.

The acquisition will give the Indian payments firm a quick entry to South East Asian, Middle East, the Commonwealth of Independent States (CIS) and Eastern European markets. An announcement is expected as early as Tuesday.

The deal, estimated at a little short of $100 million, has been signed, said an industry expert who is aware of the deal.

The companies confirmed the acquisition, but didn’t comment on the financial terms. “We will leapfrog Indian technology to a world stage and shorten our expansion time by over two years,” said Prabhu Ram, managing director Paynear.

Hyderabad-based Paynear creates a merchant ecosystem providing point-of-sale devices and enabling digital payments for online businesses. While its primary customer is the small, medium-sized merchant, as a payment service provider licence holder the company also partners banks and currently counts Axis Bank and RBL among them.

Paynear could, for example, provide a small shop with a point of sale to swipe a credit card and a mobile application to generate an invoice. The shopkeeper can accept cards or online payments that will be routed to a Paynear temporary account and settled with the bank after deducting transaction fees as per the regulated timeline. GoSwiff is a white-labelled technology platform that develops applications, software and builds business logic for companies or financial institutions in the digital payments space.

“Although there is potential for every client, SME is the real opportunity for Paynear to explore in these market,” said GoSwiff chief executive Mark Patrick. Paynear has the ability to also “fiscalise”, or process, transaction-based tax payments such as goods and services tax or any cess directly from the payment made to the merchant, said Ram, who is also the group chief executive. In countries like Russia, it is mandatory to do this immediately for every transaction, for which such a solution is needed, he added.

The company can tap more than 30 banks and financial companies that engage GoSwiff ’s service and takeover the payment and settlement for a fee. “We count at least one of the top two customers in each of the 20 markets we are present in,” said Patrick.

“Now, with merchants almost being forced to use digital payments, we are planning to provide a holistic solution that can generate invoices, catalogue, create customer records and even help with tax filing,” said Ram.

In the current financial year, Paynear expects to record revenue of Rs 110 crore with a marginal net profit. GoSwiff last year posted revenue of $22 million, but has yet to turn profitable.

A white label service is valued around five times its revenue, while a payment partner managing the entire suite commands 10 times the multiple, said an investment banker. Point of sale equipment and service is a cost for the financial institution which narrows the touch points that will be serviced.

The current share capital of Paynear, largely raised from friends and family, is $6 million. Founders in GoSwiff, chaired by Maurice Amon, on the other hand, have invested $50 million so far.

Paynear is financing the acquisition with a loan from its promoters. At a later stage, the founders may redeem the debt if the combined entity is able to tap capital markets, said the industry expert. Otherwise, they would have the option to get shares for the loan amount. Consark Advisory Services and Collin N G Partners were the financial and legal advisers.